Tear Sheet: Fomento Económico Mexicano, S.A.B. de C.V.

The company?s fast divestments of large noncore assets in the past 12-18 months have significantly raised its cash reserves to about $8.7 billion as of March 31, 2024. Despite a more aggressive return of capital expectation for the next 12-24 months, which includes an increase of 20% on ordinary dividends, extraordinary distributions and doubling the size of its share buyback program, and opportunistic tender offers on some of its debt, we expect FEMSA will use a large part of its cash reserves to pursue growth initiatives within the retail and digital segments. Our base-case scenario contemplates 2024 year-end cash balance around $6 billion, absent any major acquisition. FEMSA?s management has said the U.S. retail market represents a potential growth venue

...June 27, 2024 In S&P Global Ratings' view, Fomento Econ=mico Mexicano, S.A.B. de C.V. (FEMSA) has significant firepower to pursue growth venues aligned with its FEMSA Forward strategy and shareholder returns in the next 12-24 months. The company's fast divestments of large noncore assets in the past 12-18 months have significantly raised its cash reserves to about $8.7 billion as of March 31, 2024. Despite a more aggressive return of capital expectation for the next 12-24 months, which includes an increase of 20% on ordinary dividends, extraordinary distributions and doubling the size of its share buyback program, and opportunistic tender offers on some of its debt, we expect FEMSA will use a large part of its cash reserves to pursue growth initiatives within the retail and digital segments. Our base-case scenario contemplates 2024 year-end cash balance around $6 billion, absent any major acquisition. Expanding toward the U.S. is the main target. FEMSA's management has said the U.S. retail...

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